ADMIRALTY LAW & MARINE

INSURANCE
TUESDAY, 23 APRIL 2019

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 THE TALK – THE 3 DIFFERENCES.

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 SPEAKER’S PROFILE

CLIVE NAVIN SELVAPANDIAN

Partner - Shipping and International Trade Disputes Department

Chambers and Partners (Asia Pacific) 2019:

Clive Navin Selvapandian is an up-and-coming practitioner who has a strong track
record on both wet and dry shipping disputes. One client reports: "He is knowledgeable,
very prompt and offers clients a lot of comfort as he speaks in very simple terms and
delivers what is needed."

E:
clive.selvapandian@christopherle Legal 500 (Asia Pacific) 2019:
eong.com
M: +601 7201 4485 The 'very objective, sharp and solution-oriented' Clive Selvapandian is a shipping and
trade disputes specialist;

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 ADMIRALTY LAW

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 WHY ARREST?

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 ENSURE YOU GET PAID

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 JURISDICTIONAL CHALLENGES*

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 GETTING PAID - A NON - IN REM SUIT /
NORMAL SUIT

1 2 3
CLAIMANT SUES CLAIMANT CLAIMANT GETS
RESPONDENT SECURES MONEY
JUDGMENT

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 GETTING PAID - AN IN REM SUIT

2
3 1
CLAIMANT
CLAIMANT GETS CLAIMANT SUES
SECURES
MONEY RESPONDENT
JUDGMENT

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 JURISDICTION – A NON - IN REM SUIT /
NORMAL SUIT

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 JURISDICTION – AN IN REM SUIT

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 THE THREE
CONSIDERATIONS

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 THE THREE CONSIDERATIONS

LEGAL
CONSIDERATIONS

GEOGRAPHICAL COMMERCIAL
CONSIDERATIONS CONSIDERATIONS

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 LEGAL &
COMMERCIAL
CONSIDERATIONS

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 LEGAL CONSIDERATIONS – TYPES OF CLAIMS

STATUTORY
LIENS

MARITIME
LIENS

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 MARITIME LIENS

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 LEGAL CONSIDERATIONS – MARITIME LIENS
SALVAGE
LIENS DAMAGE
Bottomry Liens
LIENS

The 5
Maritime
Liens
Disbursements
Liens
Wages
Liens

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 LEGAL CONSIDERATIONS – SALVAGE LIEN

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 LEGAL CONSIDERATIONS – DAMAGE LIEN

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 MARITIME LIENS – COMPARISON (1)
MARITIME LIENS STATUTORY LIENS

5 CATEGORIES OF CLAIMS. 18 CATEGORIES OF CLAIMS.

RELATIVELY HIGH IN PRIORITY RELATIVELY LOW IN PRIORITY

RANKING (SEE PYRAMID). RANKING (SEE PYRAMID).

NOT DEFEATED BY A SALE OF GENERALLY DEFEATED BY THE

THE VESSEL (BEWARE – SALE OF A VESSEL – NOTE THE
JUDICIAL SALE). 4 CATEGORIES.

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 MARITIME LIENS – COMPARISON (2)

MARITIME LIENS STATUTORY LIENS

ACCRUES THE MOMENT THE DEBT ACCRUES AT THE TIME THE WRIT IS
IS INCURRED. ISSUED.

CAN ONLY BE BROUGHT AGAINST MOST CAN BE BROUGHT AGAINST

THE OFFENDING SHIP (NO SISTER OFFENDING AND SISTER SHIP.
SHIP ARREST). SOME ONLY AGAINST OFFENDING
SHIP.

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 STATUTORY LIENS

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 ESTABLISHED CATEGORIES

18 categories including:
• Claim in respect of Mortgage or Charge on the Ship.
• Claim arising out of an Agreement relating to the
Carriage of Goods in a Ship.
• Claim in Respect of Goods or Materials Supplied to
Ship for Operations or Maintenance.

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 ESTABLISHED CATEGORIES

• Claim by a Master or Member of Crew for Wages.

• Claim in the Nature of Towage.
• Claim in the Nature of Pilotage.
• Claim in the Nature of a General Average Act.

NOT IN
• Claims By Insurers for Unpaid Premiums.
• Claims Under a Agreement to Manage Ships.
• Lay up Service Provider fees.

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 STATUTORY LIENS – COMPARISON (1)

MARITIME LIENS STATUTORY LIENS

5 CATEGORIES OF CLAIMS. 18 CATEGORIES OF CLAIMS.

RELATIVELY HIGH IN PRIORITY RELATIVELY LOW IN PRIORITY RANKING

RANKING. (SEE DIAGRAM).

NOT DEFEATED BY A SALE OF THE GENERALLY DEFEATED BY THE SALE OF

VESSEL (BEWARE – JUDICIAL SALE). A VESSEL (IN REM – IN PERSONAM
LIABILITY) – NOTE THE 4 CATEGORIES.

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 STATUTORY LIENS – COMPARISON (2)

MARITIME LIENS STATUTORY LIENS

ACCRUES THE MOMENT THE DEBT IS ACCRUES AT THE TIME THE WRIT IS
INCURRED. ISSUED.

CAN ONLY BE BROUGHT AGAINST THE MOST CAN BE BROUGHT AGAINST

OFFENDING SHIP (NO SISTER SHIP OFFENDING AND SISTER SHIP. SOME
ARREST). ONLY AGAINST OFFENDING SHIP.

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 LEGAL CONSIDERATIONS – STATUTORY LIENS

ESTABLISHED
CATEGORIES

LEGAL
REQUIREMENTS
MET
OWNER/DEMISE
CHARTERER
LIABLE

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 THE ARREST COURT PROCESS

OBTAIN ATTEND
COLLATE
UNDERTAKING & HEARING
EVIDENCE ARREST
SHIP ARREST BEFORE
AND DRAFT VESSEL.
DEPOSIT & FILE ADMIRALTY
PAPERS.
DOCUMENTS. REGISTRAR.

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 INTERMISSION – THE OTHER PARTIES

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 THE SHIPOWNERS’ MOVE (1) – CAVEATS
AGAINST ARREST

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 THE SHIPOWNERS’ MOVE (2) – ALTERNATIVE
SECURITY

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 THE ADMIRALTY COURT

SPECIALIST FEATURES?

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 THE SHIPOWNERS’ MOVE (3) – SET ASIDE &
DAMAGES FOR WRONGFUL ARREST

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 THE DIFFERENT STANDARDS

DAMAGES FOR WRONGFUL ARREST (COMPENSATION)

SETTING ASIDE ARREST (NO COMPENSATION)

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 INTERVENERS/CO-CREDITORS

• Study your rankings in the pyramid.

• Must intervene while the Vessel is under arrest or the proceeds of sale are
in Court. Once Vessel has left – no point.

• Must initiate your own suit to obtain judgment.

• Consider staying proceedings in the arrest suit.

• If shipowner does not enter appearance, fight off the arresting party’s
claim and also fight off other creditors.

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 ARRESTED CARGO ON BOARD SHIP

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 ARRESTED SHIP WITH CARGO ON BOARD

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 POST ARREST HURDLES

CREW WAGES SUPPLY

SECURITY AND
REPATRIATION FOOD
GUARDS

PORT RISK SUPPLY

INSURANCE BUNKERS

HURDLES APPOINT SHIP

PORT AGENT
DUES
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 JUDICIAL SALE OF
VESSEL

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 THE FOUR METHODS OF SALE

SALE BY PUBLIC
AUCTION

SALE BY PRIVATE
TREATY

PRIVATE DIRECT SALE

SALE PENDENTE
LITE
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 THREE AIMS OF A JUDICIAL SALE

ADEQUATE
PUBLICITY

BEST ACHIEVE
POSSIBLE
PRICE FINALITY

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 JUDICIAL SALE – EFFECTS

FURTHER CLAIMS
CLEAN SALE AGAINST THE
PROCEEDS ONLY

EFFECTS
OF A
JUDICIAL
SALE

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 SALE BY PRIVATE TREATY

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 PRIVATE DIRECT SALE – BANKS - WHY?

SAVING COSTS
AND TIME
NO RISK OF
NEGLIGENT
NO INDEMNITIES VALUATION
(FREE FROM DEBT)

FINANCE THE
PREFERRED WHY? PURCHASE?
PURCHASER

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 PRIVATE DIRECT SALE – BANKS - RISKS?

UNDERVALUE THE VESSEL

(NO FLOOR VALUATION)

SALE NOT
RECOGNISED
CONTEMPT OF
COURT
(INTERFERENCE
WITH COURT
PROCEDURE) RISKS

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 PRIVATE DIRECT SALE – BANKS - WHEN?

WASTING OR NO OTHER
MORTGAGEE IS
DANGEROUS COMMERCIAL
ONLY CREDITOR
SHIP OR CARGO OPPORTUNITY

ATTEMPTS AT
PUBLIC AUCTIONS
HAVE FAILED MORTGAGEE IS
FIRST IN LINE –
DEBT LARGER THAN
NO READY MARKET
WHEN FUND.
FOR THE VESSEL
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 SALE PENDENTE LITE – INTRODUCTION

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 SALE PENDENTE LITE – WHEN?

DETERIORATING
RAPIDLY
DISPROPORTIONATE
MAINTENANCE
PERISHABLE COSTS

WHEN?
(GOOD SHIPOWNER
DANGEROUS REASON) UNREPRESENTED

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 SALE PENDENTE LITE – FACTORS?

CLAIMANT WANTS
TO FORCE
SHIPOWNER WANTS SETTLEMENT HOW MUCH
TO ASSERT (CURRENT DEVALUATION?
PRESSURE MARKET) OTHER
CREDITORS?

GOOD FACTORS
REASON TO UNLESS ORDER
CONSIDER

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 RANKING OF
PRIORITIES FOR
PAYMENT

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 RANKING OF PRIORITIES OF PAYMENT
Port and
Harbour
Authorities
The Sheriff’s
Expenses
Costs of the
Producer of the Fund
Maritime Liens
Possessory Liens
Mortgages
Statutory Liens
Vessel Owners (Remainder)
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 GEOGRAPHICAL
CONSIDERATIONS

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 GEOGRAPHICAL CONSIDERATIONS

IS THE VESSEL IN MALAYSIAN WATERS?

THE TWO POSSIBILITIES

OUTSIDE PORT WITHIN PORT

LIMITS LIMITS

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 INSOLVENCY & JUDICIAL MGMT. PROCEEDINGS

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 INSOLVENCY PROCEEDINGS – MARITIME LIEN

MARITIME LIENS WINDING UP MARITIME LIENS

BEFORE WINDING UP PETITION AFTER WINDING UP
PRESENTED/
RESOLUTION
PASSED
SECURED CREDITOR SECURED CREDITOR
ALTHOUGH NO WRIT
WAS FILED.

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 INSOLVENCY PROCEEDINGS – STATUTORY
LIEN

STATUTORY LIENS WINDING UP STATUTORY LIEN

BEFORE WINDING UP PETITION LIENS AFTER
PRESENTED/ WINDING UP
RESOLUTION
PASSED
SECURED CREDITOR UNSECURED
ONLY IF WRIT WAS CREDITOR IF WRIT IS
FILED BEFORE. NOT FILED – EVEN IF
CAUSE OF ACTION
HAPPENED PRIOR TO
WINDING UP.
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 INSOLVENCY PROCEEDINGS

FOREIGN DOMESTIC
INSOLVENCY INSOLVENCY
PROCEDINGS PROCEEDINGS

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 WHERE IS THE MONEY?
Port and
Harbour
Authorities
The Sheriff’s
Expenses
Costs of the Producer
of the Fund
Maritime Liens
Possessory Liens
Mortgages
Statutory Liens
Vessel Owners (Remainder)
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 LIMITATION LAWS

THE 1957 THE 1976

CONVENTION CONVENTION

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 MARINE INSURANCE

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 COMMERCIAL
CONSIDERATION

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 LAW AND JURISDICTION

ENGLISH LAW = ENGLISH COURTS

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 THE BEGINNING

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 SOURCES OF LAW

• s3 of the Civil Law Act 1956

• United Kingdom’s Marine Insurance Act 1906

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 WHY INSURE?

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 CONTRACT OF INDEMNITY

DOUBLE ABANDONMENT
INSURABLE INSURANCE
INTEREST

OVER CONTRACT
VALUATION OF SUBROGATION
INDEMNITY

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 INSURABLE INTEREST

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 GOOD FAITH
REQUIREMENT

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 GOOD FAITH REQUIREMENT

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 ELEMENTS OF GOOD FAITH REQUIREMENT

TYPES OF THE OVERRIDING

REPRESENTATIONS DUTY
WHEN TO ?
DISCLOSE?

DUTY OF GOOD
DISCLOSURE FAITH RECIPROCAL
ELEMENTS DUTY

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 FACTS WHICH NEED NOT BE DISCLOSED

COMMON CIRCUMSTANCES
CIRCUMSTANCES NOTORIETY OR THAT ARE WAIVED
KNOWN TO THE KNOWLEDGE
INSURER

DIMINISH SUPERFLUOS
NEED NOT BY REASON OF
THE RISK BE EXPRESS OR
DISCLOSED IMPLIED
WARRANTY
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 THE TEST FOR MATERIALITY

• WOULD A PRUDENT UNDERWRITER HAVE BEEN INFLUENCED BY

THE INFORMATION?

• WAS THE ACTUAL UNDERWRITER INFLUENCED BY THE

ASSURED’S FAILURE TO DISCLOSE THE INFORMATION?

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 THE POLICY

UNVALUED POLICY WHAT THE POLICY

MUST SATISFY?

VALUED THE FLOATING POLICY BY

SHIPS
POLICY POLICY
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 ELEMENTS OF WARRANTIES

WARRANTY OF WARRANTY OF
GOOD SAFETY SEAWORTHINESS
EXPRESS OF SHIP
WARRANTIES

NATURE OF
WARRANTY WARRANTY OF
WARRANTIES CARGOWORTHINESS
OF SHIP

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 INSURED RISKS

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 PARTIAL AND TOTAL LOSSES

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 CONSTRUCTIVE TOTAL LOSSES

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 NOTICE OF ABANDONMENT

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 EFFECT OF ABANDONMENT

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 GENERAL AVERAGE LOSSES

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 SUBROGATION & RECOUPMENT

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 THANK YOU
Christopher & Lee Ong
Level 22, Axiata Tower
No. 9, Jalan Stesen Sentral 5
Kuala Lumpur Sentral
50470 Kuala Lumpur, Malaysia

+603 2273 1919

info@rajahtannasia.com

www.christopherleeong.com
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